Retail Real Estate Investing Blog | RockStep Capital

Achieving Shopping Center Success: How Sponsors Attract and Retain Top Tenants

Written by Andy Weiner | Feb 13, 2025 3:00:00 PM

A successful shopping center doesn’t just happen—it’s built through smart investments, strong tenant relationships, and a clear long-term vision. As the sponsor—or general partner—RockStep Capital is responsible for managing every stage of an investment, from site selection and financing to leasing, construction, and long-term asset management. Our job is to ensure each property reaches its full potential, delivering strong returns for investors while creating vibrant retail destinations for tenants and customers alike.

What sets RockStep apart is that we are a vertically integrated company. This means we handle every part of the investment process in-house: acquisitions, development, leasing, and property management, rather than outsourcing key responsibilities to third parties. Keeping everything under one roof allows us to move quickly, control costs, and make smarter decisions that benefit both our tenants and our investors.

But a thriving shopping center is about more than just filling space. The key is bringing in retailers that complement one another, drive foot traffic, and contribute to a vibrant retail environment. That’s how we create long-term value for our investors and the communities we serve.

Here’s how we do it.

Strategic Leasing: What Makes a Shopping Center Viable?

At RockStep Capital, we take a methodical approach to developing new shopping centers, ensuring each decision is backed by careful analysis and long-term planning. You need a quality tenant to either buy the land, like Target, Walmart, or Costco, or lease the property like a TJ Maxx, Ross, or Burlington.

RockStep's Approach to Pre-Leasing

For us, pre-leasing is non-negotiable. Securing commitments from key tenants before construction begins is essential to long-term success. Without this foundation, a shopping center may struggle to attract additional tenants and sustain profitability.

Our pre-leasing strategy includes:

  • Leasing at least 50% of the space before construction begins – This ensures financial viability and makes securing funding for new projects easier.
  • Signing agreements with anchor tenants early – Retailers like Walmart or TJ Maxx help attract additional tenants who want to be near them.
  • Aligning with market demand – We analyze demographics and retailer interest to ensure our leasing efforts match consumer needs.

By locking in strong tenants before development begins, we reduce risk and create stable, high-performing shopping centers.

Structuring Leases For Long-Term Success

We know that a lease is more than just a contract—it’s a partnership. The goal of a tenant is not to be left alone in a shopping center if other stores don’t open or if they close down. That’s why national retailers often push for co-tenancy clauses, which let them pay reduced rent or terminate their lease if key neighboring stores close.

As a landlord, we have to balance these requests carefully. A landlord does not want a co-tenancy provision. Instead, we focus on structuring leases that work for both sides. We try to get a return on investment as high as possible by encouraging tenants to invest in their build-outs in exchange for lower rent. Additionally, we structure leases with annual rent increases of 2-3% to keep up with inflation.

The Science Behind Tenant Selection 

Not every tenant is a good fit for every shopping center. At RockStep, we take a data-driven approach to leasing, ensuring that retailers have the best chance of long-term success.

Key Factors in Tenant Selection: 

  1. Market Positioning – We prioritize secondary and tertiary markets where retailers can open stores without competing against themselves. A strong location helps ensure healthy sales.

  2. Retail Cannibalization – Retailers don’t want to open too close to their existing stores. In many of our locations, the nearest competing store is 20, 30, or even 50 miles away, leading to better sales performance.

  3. Co-Tenancy Considerations – Some retailers thrive when located near complementary stores. For example:
    • Ross, TJ Maxx, and Burlington often cluster together to attract value-conscious shoppers who specifically enjoy discount stores.
    • PetSmart and Michaels may benefit from being in the same center due to overlapping customer bases.

By carefully selecting tenants that enhance each other’s success, we create shopping environments that drive foot traffic and long-term stability.

Repurposing Vacant Spaces to Maximize Value 

Not every shopping center starts off as a success story. Some properties need a second chance, and that’s where we come in. One of RockStep Capital’s core strengths is transforming underutilized properties into high-performing assets. For example, our shopping center in Scottsbluff, Nebraska, had an empty Walmart building. We attracted Hobby Lobby, Dunham Sporting Goods, and Dollar Tree to fill this space.

Similarly, in Hutchinson, Kansas, we took a vacant Billards building and brought in TJ Maxx, Harbor Freight, and Ulta. Across multiple markets, we’ve transformed empty department stores, dead Kmarts, and other struggling retail spaces into thriving shopping centers.

Supporting Small Businesses and Local Communities 

National retailers provide stability, but small businesses add diversity and uniqueness to a shopping center. At RockStep, we work to support local businesses in markets where they can succeed. If we have many vacancies, we are very creative and supportive of new tenants, particularly by giving them some TI dollars (tenant improvement dollars) and some free rent.

This approach allows local entrepreneurs to test their business concepts without shouldering excessive financial risk. By fostering both national and local tenants, we create balanced, sustainable shopping environments that serve their communities for years to come.

Adapting to Retail Trends and Economic Challenges

The retail landscape has changed dramatically in the past decade. E-commerce has shaken up the retail world and forced many retailers out of business. The retailers that have survived have adapted, blending physical stores with e-commerce strategies that enhance convenience and customer experience.

Inflation and construction costs pose another challenge. The cost of building is up 30 to 45%, and therefore, retailers’ sales are not up by 30 to 45% on average, making expansion difficult. That’s why the RockStep Capital team focuses on acquiring existing shopping centers at a low cost. Controlling costs allows us to offer competitive lease terms while maintaining profitability. 

RockStep's Long-Term Vision 

At RockStep Capital, we don’t just own shopping centers—we create environments where tenants can thrive, communities can grow, and investors can achieve strong returns. Our formula for success is straightforward:

  • Focus on Long-Term Value: We make investment decisions with a 10- to 20-year horizon, prioritizing lasting profitability.
  • Smart Leasing Strategies: We carefully curate tenant mixes and structure leases that promote stability.
  • Strong Tenant Relationships: Our hands-on approach ensures tenants have what they need to succeed.

Looking ahead, our mission remains the same: creating win-win scenarios for tenants, landlords, and investors. Whether through strategic tenant recruitment, innovative lease structures, or adaptive reuse of properties, we are committed to building and maintaining shopping centers that drive foot traffic and generate strong financial returns.

By staying ahead of industry trends, monitoring tenant needs, and maintaining disciplined investment strategies, we ensure that RockStep’s properties remain valuable, resilient, and built for long-term success.